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Multi Brand Retail – Why not gain from FDI?

For the last two years, there has been only ‘talks’ in government circles to include foreign players – use their ‘retail’ expertise, gain from their funding capacity, boost domestic competition and efficiency in this sector – but, again the issue has been put on the back burner.

Let us understand there is $ 400 billion market size in India for retail and most of the country is not yet modernised enough to preserve cold products, vegetables and perishables – whether meat products or milk products. There is a annual loss of Rs 1 lakh crores due to wastage of products not preserved well. I do not see the kind of cold stores, in India, that I have seen in plenty while I am abroad. Populism is fine for political gains but it is un-productive and derails the economy poised to grow. I am sure, the kirana stores or the mom and pop stores will not be affected if there is globalisation of Indian retail markets. Only the value chain will be added with bigger players with more funds at disposal and that will result in creating new jobs.

With Globalisation, there will be new revenue streams generated – developing back-end infrastructure like processing plants and cold storages to augment farmers’ income. This will create new jobs in the rural areas and the concept of post-harvest management will be practised to create sustained income to the farmers. Today, the Agriculture business is seasonal and there is unemployment or underemployment amongst farmer families resulting in migration to crowded urban areas like Mumbai. This could be stopped because these migrants lead a very undesirable life in Mumbai besides affecting the per capita income in Mumbai.

You would be surprised to know that the India is the second largest producer of Fruits and Vegetables in the World and there is not much profit derived from this position – neither to the farmer nor to the country as such.

Bharti Enterprises, belonging to Sunil Mittal group, is expected to bring ‘Walmart’ Stores to India! Reliance has already set up several hyper-markets and ‘Reliance Fresh’ vegetable stores – besides setting up multi-brand Shoe retail stores collaborating with Japanese (acupuncture) producers. The opening up of the retail sector will bring efficiency, which will benefit the consumer and the producer. There will be only ‘expansion of market size’ tapping new regions and not loss of jobs as feared.

And, as the Indian Economy’s growth picks up steam, disposable income of the middle-income group also will go up. So, why are we not get going? Why not go for complete globalisation in Retail? Why not finish what we intended to do?